Amazon: E-Commerce Success Story

Soon after Amazon.com Inc. debuted 10 years ago, Jeff Bezos and his handful of employees spent late summer nights packing books in a tiny warehouse, scrambling to ship a growing gush of orders.

Today, the man who has grown accustomed to being hailed the king of Internet commerce runs a global powerhouse that did nearly $7 billion in sales last year, dealing in everything from banjo cases to wild boar baby back ribs.

As more businesses beef up their online operations, is the company that helped get it all started in danger of seeing its dominance eroded by the competitors it helped spawn?

Time will tell, but industry experts say Amazon is well positioned to maintain a firm grip on its title as the undisputed e-commerce leader.

In the beginning, Bezos said he had no plans to sell anything but books online. But after it went live on July 16, 1995, the business took off more quickly than anyone had predicted, and before long customers started clamoring for more.

"We actually started to get e-mails from customers saying, `Would you consider selling music, because I'd really like to buy music this way, and DVDs, and electronics?" Bezos said in a recent interview.

Amazon has nearly 49 million active customers. They bought more electronics during last year's holiday blitz than books, a first for the company.

With $6.92 billion in sales in 2004, Amazon ranked at the top of Internet Retailer's annual top 400 list, well ahead of computer maker Dell Inc., which posted $3.25 billion in online business-to-consumer sales. Office Depot Inc., which has a partnership with Amazon, wasn't far behind with $3.1 billion.

EBay users sold $34.2 billion in merchandise through the online auction house in 2004 but the magazine doesn't include it on the list because it's essentially an online shopping bazaar, not a retailer.

Scott Devitt, an analyst with the Baltimore investment firm Legg Mason Wood Walker, Inc. said he thinks comparison shopping sites like shopping.com and shopzilla.com pose the most formidable threat, because they can often push prices lower than Amazon.

"But when you buy from a comparison shopping site, just like when you buy from eBay, you don't know what you're getting from the merchant," Devitt said. Amazon has had a decade to build up trust that it will deliver orders on time and cheaply enough to keep customers coming back.